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CFPB Joins Complex Debt Collection Lawsuit: Possible RICO Penalties

Proper notice also allows the debtor to hire a qualified consumer protection attorney to appear on his or her behalf and present the opposing side of the case.                 In order to support the claims of the debtors in Monique Sykes, et al., vs. Mel Harris & Associates LLC et al., the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have filed an amici curiae (“friends of the court”) brief.

Basic Facts of This Case

            The debtor plaintiffs allege that they were not properly served with process notifying them of lawsuits being filed against them by the Mel Harris collection law firm (on behalf of debt buyer Leucadia National Corporation). After the plaintiffs did not receive notice of the lawsuits, they later learned that Leucadia and Harris had obtained default judgments against them. This type of judgment allows the debt collectors to both freeze the plaintiffs’ bank accounts and threaten to garnish their wages (or force them to sell property to pay off their debts).

            Consumer protection attorneys and their adversaries -- as well as various government agencies -- are very concerned about how the Second Court of Appeals will rule in this class action lawsuit. The case is on appeal from a judgment entered by the United States District Court for the Southern District of New York.



Unique, Added Aspects of This Debt Case

Since it’s been alleged that there was collusion involved between Mel Harris and Leucadia, the defendants are fearful that RICO (Racketeer Influenced and Corrupt Organizations Act) penalties may be charged against them.

This law passed back in 1970 allows organized crime victims to sue those responsible for their injuries and to obtain punitive damages if they win their cases. No law-abiding company would ever want to have penalties assessed against it under this law since RICO covers acts or threats “involving murder, kidnapping, gambling, arson, robbery, bribery [and] extortion . . . [among other crimes].”                                                                                                              Of course, the defendants are claiming in sworn affidavits that process was properly served on the plaintiffs in this FDCPA-based lawsuit.                                                                                 Hopefully, the plaintiffs will prevail if all of the evidence offered to the court favors their arguments. If that occurs, the CFPB and FTC can use this lawsuit as a basis to create more stringent standards for protecting debtors from unscrupulous debt collectors and their cohorts.


If you believe that you’re a victim of any abusive debt collection practices, contact the Law Offices of Georgia consumer protection attorney Shane Smith so that you can learn more about your rights under federal and state consumer protection statutes. Call (770) 487-8999 today to schedule your free initial consultation.

Shane Smith
Advocate for the Seriously Injured in Georgia